Key Steps to Developing a Stakeholder Scorecard
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Stakeholders are essential to an organization’s operations and development. Stakeholders are all persons and organizations whose interests are affected by the events and actions occurring inside an organization.
Stakeholders guarantee that the organization’s endeavors and products are perfect. In exchange, the business endeavors to provide stakeholder satisfaction. Both parties gain from the association’s efforts, and both get something in return.
Principal stakeholder groups relevant to the majority of businesses may be divided into 4 categories:
• Clientele — encompass all constituencies served by the organization.
• Workers — excluding top managers, board members, and directors, they are the individuals who serve the company and see themselves as its representatives.
• Suppliers — include third-party enterprises, subcontractors, and partners that supply the essential raw materials, equipment, technology, or supplies for the production of goods and services.
• Stewards — refer to the directors, top managers, and board members of a company who are responsible for creating the brand and attaining sustainable progress.
For the evaluation of performance of various stakeholders, it is necessary to quantify their primary contributions and inducements. This is precisely the function of a Stakeholder Scorecard. The Stakeholder Scorecard is a record of all significant corporate stakeholders, their contributions, and the pay they get in exchange. The Stakeholder Scorecard focuses on stakeholder satisfaction and leverages this to increase productivity, performance, and attainment of corporate goals.
In contrast to the Balanced Scorecard, the Stakeholder Scorecard provides a stakeholder-centric approach to measuring organizational performance by evaluating the extent to which a business strives to meet the needs of its stakeholders, encourage them to take ownership of it, and contribute to its growth.
The Stakeholder Scorecard can be developed following these 5 systematic steps.
1. Differentiate the stakeholder groups.
2. Record the contributions and inducements of each organization.
3. Rank and prioritize the contributions and Inducements.
4. Identify metrics to measure the contributions and inducements.
5. Put the metrics into effect
Let’s examine some of these steps in further detail.
1. Differentiate the Stakeholder Groups.
Identifying the important stakeholder groups is the first step in developing a Stakeholder Scorecard. Principal stakeholder groups include suppliers, clients served, staff, and upper management. This group may also include of members of society, regulatory authorities, creditors, and investors. This should be presented in black and white, as a list of names and organizations.
Step 2: Record the Contributions and Inducements of Each Group.
The last step is to build a columnar list with the contributions made by and incentives provided to each stakeholder group. For instance, employee contributions may include the successful fulfillment of specified tasks, the ongoing improvement of performance, and/or reliability. The given inducements may include compensation, prizes, consistent income, etc.
Step 3: Rank and Prioritize the Contributions and Inducements
The next stage, after the identification of contributions and inducements, is to rank and prioritize the most important contributions and inducements. When ranking contributions and inducements, both the organization and its stakeholders should be considered.
Documenting the stakeholders, their contributions, and inducements assists in determining the effect of inducements on encouraging stakeholders to do their best effort.
Interested in learning more about the other steps of the Stakeholder Scorecard process? You can download an editable PowerPoint presentation on Stakeholder Scorecard here on the Flevy documents marketplace.
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